[PE Weekly Review] Spot Prices in the Polyethylene Market Decline

1. Summary of Market Situation This Week

This week, international oil prices have risen due to the ongoing Russia-Ukraine conflict, which has raised potential supply risks, combined with a decrease in U.S. commercial crude oil inventories, both of which have supported oil prices.

This week, orders in the PE greenhouse film market are slowly progressing, with large-scale enterprises maintaining stable production and a slight increase in the operating rate of small and medium-sized enterprises.

In the current period, polyethylene production is 642,700 tons, an increase of 11,800 tons compared to the previous period. The total production for the next period is expected to be 678,500 tons, an increase of 35,800 tons compared to the current period.

2. Review of the Polyethylene Market Trends This Week

This week, the domestic polyethylene spot market prices fell by 3-35 yuan/ton (weekly average). With the news of the Federal Reserve lowering interest rates by 25 basis points, market expectations declined, resulting in a substantial adjustment in the market. Additionally, as the National Day holiday approaches, suppliers are actively reducing inventory. However, downstream purchase intentions are limited, leading suppliers to offer discounts to sell, causing a price drop. HDPE film prices remained unchanged at 7,675 yuan/ton compared to last week; LDPE film prices were at 9,609 yuan/ton, down by 30 yuan/ton compared to last week; LLDPE film prices were at 7,419 yuan/ton, down by 28 yuan/ton compared to last week. (Note: The sample data for HDPE film prices has been adjusted.)

3. Polyethylene Market Outlook

Polyethylene prices are expected to fluctuate slightly downward in the next period. Key points to watch: 1. Cost aspect: It is anticipated that the support from oil-based costs will weaken, while coal-based costs will remain largely unchanged. 2. Supply aspect: Market supply involves the planned restarts of facilities such as Lianyungang Petrochemical, Sinochem Quanzhou, and Bora LyondellBasell, with only the addition of planned maintenance at Zhenhai Refining expected, leading to an increase. The total production for the next period is expected to be 678,500 tons, an increase of 35,800 tons compared to the current period. 3. Demand aspect: The overall operating rate of various PE downstream industries is expected to decrease by 3.14% next week. Some downstream factories will suspend operations for the holiday, but historically, there is a concentrated demand for agricultural films post-holiday. To ensure production continuity after the holiday, downstream enterprises often stock up to varying degrees, thus polyethylene demand is expected to increase. In summary, as the holiday approaches, market inventory clearance pressure increases. It is anticipated that merchants will increase incentives to ship goods, leading to slightly lower prices with a range of 5-40 yuan/ton.